How Could You Compensate an Investor for Taking on a Significant

question 81

Multiple Choice

How could you compensate an investor for taking on a significant amount of risk?

• A) Increase the expected rate of return
• B) Raise more debt capital
• C) Offer stock at a higher price
• D) Increase sales

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Definitions:

Purchase Discount

A reduction in the purchase price, offered by the seller to the buyer, as an incentive for early payment.

Terms 2/10 n/30

Payment terms indicating a 2% discount if paid within 10 days, otherwise the full amount is due within 30 days.

Physical Inventory Count

An assessment method where a business physically counts its entire inventory to verify stock records and accounts.

Perpetual Inventory System

An inventory management method where updates to inventory records are made in real-time following each receipt or sale of inventory items.